Defined Outcome Buffered ETFs Show 49

In 2018, Innovator Capital Management, a financial product creator, developed an investing strategy called “defined outcome” exchange-traded funds (ETFs). Today there are several billion dollars invested in their strategies.

Historically, when we’ve put money in market, we’ve not been able to determine what our outcome will be, but often commentators or advisors will discuss past performance of investments.

What defined outcome ETFs do is allow the investor a level of certainty that’s not normally found in stock market investments. The investor has exposure to broad market indexes like the S&P, Russell, or emerging markets, and in exchange for a performance cap, the investor will have a known built in buffer from losses. Innovator has three buffered ETF options.

 With the first option the investor is buffered from the first 9% of losses in the S&P 500. After the first 9% of losses the investor could then lose money. The ETF holder participates in the gains of the S&P 500 one-to-one up to 9% of the gains. So, if the S&P 500 goes up over 9% the investor would hit a performance cap in exchange for the buffer from the first 9% of losses.

The second option is similar to the first option but with a 15% buffer, so the investor participates one-to-one going up to 15% and conversely down 15%.

Innovator has a third option that is an “ultra-buffer.” With this option the investor agrees to take the first 5% of losses, but would then be buffered for the next 30% down. So, if the S&P 500 fell 37%, the holder of the ultra-buffer ETF investor would experience a loss of 7%.

With bond yields being at record lows and equity valuations at record highs, it’s created a dilemma of where do you put money? This may be a viable solution for your portfolio.

I encourage you to find a competent financial advisor to help you determine if a buffered ETFs are appropriate for your portfolio. This won't be a suitable approach for all investors. There is no guarantee that the funds described here will achieve their investment objective.

 If you’d like to learn more about this strategy, just reply to this email and I’ll send you a more exhaustive video explanation of buffered ETFs. Also, I'd be happy to explain the finer details of this investing strategy. You can reach me by calling 864.641.7955

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